SANTA FE, New Mexico » There are not many things New Mexicans cherish more than chile.

Not the soupy stuff from Texas or Cincinnati — that is chili, with an ‘i’ — but the fiery red or green sauce drawn from peppers plucked on New Mexico’s sun-soaked farms.

For generations here, locals have slathered their food with it, argued about who serves the hottest and whispered recipes passed on from tias, abuelas — aunts and grandmothers — and even the occasional East Coast transplant.

But these days, the state’s legendary chile industry may be in trouble.

Despite an increased demand around the country, chile harvesting in New Mexico has plummeted in the past 20 years. Farmers and suppliers say they are being priced out by cheaper foreign peppers and betrayed by impostors who falsely claim to sell New Mexico chile in restaurants and supermarkets and at roadside stands.

Lying about the origins of one’s chile is considered blasphemy in New Mexico, where the spelling of choice sets the sauce apart from the more common rendering.

And now, a new bill is taking aim at those who fraudulently assert that their chili is grown in New Mexico.

"What we’ve got is people coming in and selling chile and saying it’s from New Mexico, and some of it is being shipped in from Mexico or elsewhere," said State Rep. Andy Nunez, a former chile farmer from Hatch and sponsor of the New Mexico Chile Advertising Act. "We’re trying to keep the integrity of New Mexico chile, which we think is the best."

The proposal would make it illegal to sell or advertise any product as New Mexico chile unless its peppers are grown in the state. The state’s Agriculture Department would help enforce the rule.

Indeed, local chile products are good for business here, generating about $400 million annually, according to the New Mexico Chile Association, which helped draft the bill. Renowned for their flavor and heat, New Mexico chile peppers have found their way onto supermarket shelves and dinner tables around the country.

But Jaye Hawkins, executive director of the chile trade group, said the sale of fake New Mexico chile here "happens very often, more often than you would imagine."

"If you’re from New Mexico, it’s really upsetting to see people do that," Hawkins said. "This is not so much an issue of policing, but making sure consumers can be sure they are getting New Mexico chile when that’s what they think they’re buying."

It is also an economic issue. While consumption of pepper products in the United States has more than doubled since the mid-1990s, according to the chile association and New Mexico State University, statewide chile production has dropped significantly. In 1992, farmers harvested 34,500 acres of chiles; last year, fewer than 9,000 were harvested, the association said.

Some suppliers attribute the drop in part to supermarkets, fresh chile stands and restaurants — even in New Mexico — importing chile peppers from Mexico or Asia, which can cost 10 percent to 30 percent less than local products.

"We’re losing an industry that is part of our culture," said Gene Baca, senior vice president for Bueno Foods in Albuquerque and president of the chile association.

Despite some concerns that the bill would be difficult to enforce and could hurt roadside vendors, it recently cleared an initial legislative committee and lawmakers were to debate its merits in the next few days.

At the Horseman’s Haven Cafe in Santa Fe, famous for its two levels of green chile — the second of which is so scorching that customers can only drizzle it on their food — Kim Gonzales, part owner, said that ensuring the authenticity of local chile was critical.

"This is what we’re known for," she said. "And there are many restaurants in New Mexico who say their chile is from here but it’s not. It’s pretty much an insult to our state."

© 2011 The New York Times Company